Programmatic: It’s the Consumer, Stupid!

This is adapted from my original article poste on LinkedIn on February 22nd, 2016. You can read the full version here.

Political strategist James Carville famously simplified the 1992 presidential election into three core messages that distilled the critical issues around the election into digestible concepts that kept the campaign on message:

Change vs. more of the same

The economy, stupid

Don’t forget health care

Clinton’s campaign had a consistent, concise and simple message which connected with voters and was central to their victory in 1992.

We need the same simplification in how we talk about programmatic ad buying. We are losing the value proposition in an endless stream of buzzwords. Here is what I think our collective message should be when talking about programmatic:

Low-cost access to high-value users

Cost transparency

Centralized buying and attribution

Low-cost Access to High-value Users

Low-cost:

Q: Where is the most expensive place to buy a pair of Nikes?

A: A Nike store.

This option—going to the most expensive place—is like going directly to a publisher like CNN and buying ad space. The problem for Nike or CNN is that they can only sell a small percentage of their total inventory themselves.

Q: Where is the cheapest place to buy a pair of Nikes?

A: An outlet mall or a TJ Maxx-like store.

If we want our dollar to go the furthest, we take a Saturday trip to the outlet malls or to TJ Maxx. We know this is best place to buy premium products sold at an amazingly reduced price. This is our ad exchange, the cheapest place to buy unsold premium inventory.

High Value:

There are numerous ways in which we can find and activate user intent. In simple terms, imagine a clothing store that has two beacons, one at the front door and one at the register. Using these, we can measure all users who enter the store and subtract from that total all users who complete purchases. In the remainder, we now have a group of high-value consumers who have shown interest in a brand/product but who have not completed a purchase.

Programmatic ad buying simply enables access to the low-cost ad space while at the same time targeting the group of high value users.

Cost Transparency

When you pay for online media using a flat CPM/CPC cost structure, you lose control over how much you’re actually paying per impression, which normally means you are dramatically overpaying. Remember, the whole point behind low-cost access to high-value users is the “low-cost” part.

Below is an example I’ve used a number of times before, but here are two CPMs, one where we see how much an impression costs and one where we don’t.

As I said in a previous post (“I Bet You Don’t Know Your CPM”), I am telling you that by your knowing the composition of your CPM, it immediately becomes cheaper. Cost transparency is critical to having confidence in your media investment, and it’s that confidence that will enable greater investment.

Centralized Buying and Attribution

Gone are the days of fragmented ad buying. Now we have demand-side platforms (DSPs) that can access most of the available display, video, mobile, social, native etc. global ad inventory. This means what would have taken nine or ten publisher/network ad buys can now be accomplished using one singular platform that is powered by ad-buying algorithms fueled with endless amounts of consumer data. These algorithms are also continually optimizing performance based on real-time user interactions with your brands.

What comes with centralized ad buying is also centralized measurement. This means we can now measure and test ad units, targeting tactics, and inventory in a controlled environment, all driving towards and being measured against their contributions towards a single goal.

This enables advanced attribution modeling where we can measure touch points, engagement, and ROI vs. just impressions and clicks. As ROI becomes more defined, reinvestment is much clearer. Ultimately, you’ll have much more confidence in what you’re paying for.

Bringing it All Together

It’s not about mobile vs. desktop vs. social vs. native vs. video or even about buying directly from publishers. It’s about creating engagement across all of these devices and putting in place the technology platforms that can transparently facilitate and measure this engagement.